Skip to main content

tv   Squawk on the Street  CNBC  January 8, 2016 9:00am-11:01am EST

9:00 am
with bernie sanders on socialism, would you? >> i'm not a socialist. >> i never thought you were. he said you were. >> you said it last time he walked on the set. you said upper west side liberal. >> that's different than socialist. >> have a happy weekend. right now it's time for "squawk on the street." good friday morning. welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. december jobs goes out with a bang, adding 292,000, positive revisions. futures on the upswing after the worst ever start to the year. europe holding in after that tense session in china shanghai closing up 2% as reports say the government did come in to buy. watch bonds today and oil. our road map begins with the better than expected jobs
9:01 am
number, 292 added in december. will stocks reverse the ugliest start of the year ever? >> plus more negative headlines on apple suppliers, reporting disappointing results and lower forecasts for the first quarter. and struggles at gap continue, sales fall in december. aside from the better than expected december numbers, november and october payrolls were revised upward. for all of '15, average job growth was 221, lower than the 260 in 2014, but marks the second best job creation year since 1999. hourly earnings fell slightly, which is -- once again, guys, the conundrum here. why is this not budging? >> too many people looking for too few jobs in an environment where the internet has crushed a lot of higher paying jobs that people forget, the impact of the internet is not impacted by the fed. what i found beleaguering about this, probably a half dozen
9:02 am
people will call steve liesman from the fed and say this is more of a reason why we have to tighten. enjoy what's going on now. i have some words for the people who have been complaining to me that they're scared and they hate it, they don't like it. they're worried. why aren't i advocating panic? today is your day to panic. getting some good prices. sayonara, i'll see you at 9:45 when we have piazza and griffey on. maybe you will focus on baseball or the playoffs. i don't want you in our markets. you can't handle the pain, this is a good day for you to go. maybe you should be in cds. stop complaining, hit the road, nice to meet you. >> all right. giving the four trading days we've had, knowing now that we added 2.7 million jobs in the year of 2015, bit below the 3.1 million in '14, nonetheless talking about long-term unemployment at 2.1 million.
9:03 am
labor force participation, 62.6. all that said, jim, taken with china and the devaluation of the yuan. that stock market actually open for a change. what we've seen and the fears that came up this week, even towards the end of last year about recession, where do we go from here in terms of how we approach the equity market and feel broadly speaking? >> i think there's less growth. our country is constrained. we talk about the impact of china itself and not just about china we had the ford ceo on earlier this week. people didn't ask why isn't the stock at 18? a lot of the countries that made their business to sell into china have stopped. it's not china itself, if it's caterpill caterpillar, caterpillar's
9:04 am
problems are not china. they are everybody who sold into china. if we lose global growth and peak autos are definitely here, if we lose global growth as focused on by chinese demand, a lot of companies won't do well. >> yesterday with phil lebeau, they said, yeah, long-term disruption. >> short-term what he says is pain. long-term he says is gain. that whole paradigm has been shifted in the last four days, is that -- jim stewart had a great article pointing out as the four days go that didn't work in 2014, 2011, 2010. short-term the last four days have been the worst ever. i want those people to go home. those who believe this is a great chance. i don't need you in our markets. you can go play powerball.
9:05 am
powerball, very big number this weekend. i know you went shopping at saks. >> i was in and out in ten minutes. >> you should browse. get some jewelry for your wife or go to the shoe floor that has its own zip code. i point out that he's right. there's a hiccup short-term. it doesn't feel good. if you own apple, corvo said bad things last night, cirrus said bad things. you should leave apple. no harm, no foul. >> if you want to be resigned to pain here, but this, too, shall pass, it will be fine. not great. i'm constructively negative. i said that's oxymoronic, fine, call me a moron. call me oxy. don't call me that, i've worried about the dividend. >> they have had some problems.
9:06 am
something i hear a lot about is the depth of markets themselves. even equity markets, certainly credit markets. comes up more than it ever has in terms of levels of inventory held by street firms that are to the there anymore because of the capital being held against them as a result of dodd-frank. i wonder about the depth of markets and whether that's having an effect of making the moves larger than they would be. >> thank you. i was talking last night on "mad money," i said apple is at 96. biff been on the trading desks, sell a million apple at 93. the trading desk says this is at 96. no, a guy at 91 million low. i would be at goldman, get the call. a million apple to go, i'll stop you out at 96. i'll work the order. are you kidding me? dodd-frank said you're a hedge
9:07 am
fund. there's no stop out. it's, listen, i got a million to go. liquidity is everything. liquidity was there are people who love the government and like intervention, but liquidity, they told goldman sachs please don't do this. the stock is down most of the financials in this period since august 24th. >> we made fun of the channel checks about a month and a half ago. now, sir, russ and corvo, cirrus is 70% exposed to apple. >> anyone who thought the apple build was good since the first digit on fox is wrong. the apple -- now some people saying apple will be bad in the next quarter. fine. i stipulate apple will not be good at short-term. that's why it's selling at 9 times earnings, then 8 times earnings, and then eventually 12
9:08 am
times earnings. there was a period where corvo, skyworks, cirrus logic were really good. cirrus is yiddish for trouble, and corvo and cuervo is tequila. >> i have to tell you, con st constellation brands is better. people are finding out today, oh, my god, apple. this watch, it still works. incredible. >> amazing. >> it's an apple watch, it still works. i know -- >> nobody would know it from looking at it. >> i still wear it. so i'm the only one. the people who want -- if they want out of apple, here's a nice day. 97 price.
9:09 am
i think you should leave. adam and eve for you. the garden of sin. >> you are on fire today. you're outdoing yourself. >> they want the people who hate me, because i said own apple since it was 15, i don't want you on board listening to me. i wanted you to watch when we talk about the hall of fame. >> don't drive away the viewers. >> we like a big tent. >> i like a big tent, too. just watch me more than ever. hate me, love me, watch me. you have no choice. >> passive aggressive. >> the other guys are probably talking about apples or pushing chipotle. >> it's happening on ing about . >> i don't know what you are talking about. i'm saying buy buy buy but with a lie. >> and an "e."
9:10 am
>> the other one that "y" in it also. >> we have a lot to get to. the first reaction from the white house to the jobs number. we will talk with tom perez. and then mike piazza joining us. looking at the futures. we got a bounce after the jobs number. some of that has eroded. we'll see if that lasts into the opening bell. need to hire fast?
9:11 am
go to and post your job to over one hundred of the web's leading job boards with a single click. then simply select the best candidates from one easy to review list. and now you can use zip recruiter for free. go to at ally bank no branches equals great rates. it's a fact. kind of like reunions equal blatant lying. the company is actually doing really well on, on social media. oh that's interesting. i - i started social media. oh! it was
9:12 am
♪ light piano today i saw a giant. it had no arms, but it welcomed me. (crow cawing) it had no heart, but it was alive. (train wheels on tracks) it had no mouth, but it spoke to me. it said, "rocky mountaineer: all aboard amazing".
9:13 am
. you probably heard by now it's the worst start to the year ever for the dow and s&p. nasdaq going for seven losses. today would be the first time since 2011. a rough morning for retailers. gap with a 5% drop in comps for december. banana republic and old navy seeing declines. american eagle negative. container store today will be messy. what's going on? a lot of retailer news yesterday was not so bad. >> container store is terrible. >> it hasn't been good from the day they went public. >> my father was in the gift
9:14 am
wrap business. >> it's a four cent loss. >> nothing good to say about them. gap, now it's old navy disappointing. bed bath, they continue to buy back stock. what has that done for them? i come back to lex wexner, lb that was a beautiful number. i say, listen, be careful with apparel companies. except bed bath -- i price shopped at bed bath. i get that $5 coupon in your paper, you take it there, you realize you're still not doing as well as if you went to amazon. i'm sure you find it as disappointing as i do. >> as you say, they continue to buy back stock. it's not clear what that does north retailers. they get a much better return on capital. >> you tell them. they're just a bank. it's a bank that's diminishing asset. look at what mary dillon has done with ulta salon. there's a note saying they're doing well because macy's has
9:15 am
been closing down stores. you can grow in retail. l brands says you can grow in retail. bed bath & beyond says we will not stay our course of buying back stock what has it done for shareholders? nothing. buy back sometimes like war are good for absolutely nothing. >> urban is another good example. november and december comps down 2, but in line. >> maybe they're serving that pizza now. remember the pizza -- there's a combination. i'll take some pepperoni with a bridal dress from anthropology. winning combination. from philadelphia. i knew the guys since day one. guys, get with the program. the stock is so low. anything can bounce. >> and you pointed out that warm weather is coming along. you think a lot of that inventory will get liquidated faster? >> ross stores has been a winner they have come in and say we'll take your stuff.
9:16 am
pay for more, dress for less. you might want to be at macy's, but jcpenney did better than macy's. isn't that something? >> yeah. this idea of buybacks for retailers, some of whom don't have strong balance sheets. i wonder why they're putting themselves in jeopardy in such a environment as the real leverage, as you know, is much more in actually getting comp store sales moving the right way. >> we don't want companies who buy back stock in retail, we want growth retailers. i'm disappointed in a lot of retailers for not understanding that. it is incredible. that's a difference business, retail. you want to grow numbers. we're not as crazy at about bye backs. gap store has bought back a lot of stuff. what has that done? lb is innovating. why is that company chronically on the 52-week high list?
9:17 am
they innovate. >> you have to keep an eye on the eps line, also compensation for the management team. >> that's a great point. great point. >> we'll get the mad dash, count down to the opening bell after the break. take another look at futures. more "squawk on the street" from the nyse straight ahead. ...
9:18 am
9:19 am
9:20 am
mad dash for this friday. it's been a heck of a week. >> it's been tough. >> yesterday that close -- >> yeah. that was one of those, where i said if it is a rough opening, you can't handle it. if you can't handle the volatility, this is a good chance. it will be a volatile year. a year where you have to be resigned to take some pain. if you have a chance to get out, and you don't like it, i don't care about this or that. accidental high yields. international paper is a fine company. yields almost 5%. today it gets downgraded. barclays says there's no real catalyst, blah, blah, blah. it's a bottom that usually isn't a real catalyst. it can pay 5% after today. you know, that's the kind of stock i'm saying maybe you put it away. the put away concept is not something people want to do. they want to buy netflix, they actually sat down and watched
9:21 am
"murderer" and said i want to buy the stock. that's fine. people want to buy stock if they test drove a tesla. you know what albert einstein called dividends? >> no. >> the eighth wonder of the world. bright guy, einstein. einstein probably would have been selling apple at 110, buying it back at 92. he points out compound dividends, 7% as kevin o'leary said. maybe you don't do that. united technologies, 2.78 yield. you know what? at the bottom not a lot of catalyst. you get the stock right here, it's going to yield three and change. everyone loves it right here. >> i know. tannenberg. >> he was good reason to own brunswick, he said i'm willing to lose my job for this.
9:22 am
>> he wasn't working much at all. but this guy is. >> that -- he was doing exactly what was happening at the end of shawshank, when andy was making that -- >> working on the boat. >> he didn't have red coming to help him. >> what a great scene. >> my daughter and i sat there and cried when morgan freeman got to see it. yo ho the pirate's life for him. >> people are worried about the industrial economy, and they may go to elevators. otis elevators have been growing because of china we know that's not happening anymore. >> but there's a lot of servicing. david, you know what? china, maybe this thing goes to 78. david, i want to own united technologies down ten. i think it would be such a good thing to give your kids. >> okay. >> okay? >> all right.
9:23 am
>> it's a great case. real manager. i was telling him about my 17-foot boston whaler which we have to spend all of 17 minutes cleaning up. brunswick, still a good buy. >> we have more buying and selling that will be going on in seven minutes. we will also speak with ken griffey jr. and mike piazza. that's -- >> which is short apple? >> we'll ask after this. it's hard to find time to keep up on my shows.
9:24 am
that's why i switched from u-verse to xfinity. now i can download my dvr recordings and take them anywhere. ready or not, here i come! (whispers) now hide-and-seek time can also be catch-up-on-my-shows time. here i come! can't find you anywhere! don't settle for u-verse. x1 from xfinity will change the way you experience tv. they are. do i look smarter? yeah, a little. you're making money now, are you investing? well, i've been doing some research. let me introduce you to our broker. how much does he charge? i don't know. okay. uh, do you get your fees back if you're not happy?
9:25 am
(dad laughs) wow, you're laughing. that's not the way the world works. well, the world's changing. are you asking enough questions about the way your wealth is managed? wealth management, at charles schwab.
9:26 am
you're watching cnbc "squawk on the street," live from the financial capital of the world. there's mike piazza and ken griffey jr., hall of fame inductees that we hope to speak to in a couple minutes. opening bell not far away. jobs number 292 for december. unemployment at 5. wages once again relative disappointment. though, if you take all the months of the year, december was the best year on year at 2.5.
9:27 am
>> i keep waiting for maybe this will happen. but the fed doesn't want it, that's the way i read these people who spoke this week. now, they are not saying that, but that's -- they don't want wages, that would sound bad for the job, but if they want to make it no wage growth, they have the ability of doing it by tightening and not looking at the broader company. as larry kudlow said today, nothing wrong with people making a little money. nothing wrong with it. i cheer it. >> services based economy, unions gone. hard to see where it comes from. >> i agree. maybe it's because finally we get enough people -- labor fope their wage rate not just from minimum wage. it's easy for us to say i don't want that going up. boy that will hurt our market. but a lot of people work in this
9:28 am
country who need rages higher. >> without a doubt. income inequality is an issue. it is an enormous issue of incredible importance. one that may get discussed eventually on the campaign trail by either side. >> david, my ar10 earning family doesn't want that discussion. >> one discussion we haven't had yet -- >> move on from guns. oil. we have crude, 33.37, jim. it woo seem that the movement of that commodity today may dictate our movement in the market as much if not more than the strong jobs number. >> more than it does. it's almost as if people say, look out, there are billions and billions of dollars at stake if this doesn't change. >> safe to say restructurings
9:29 am
are coming. >> sand ridge was downgraded last night. i want to put out chesapeake and freeport, they need futures higher. >> a call out of goldman today, cut mare estimates for s&p earnings. a lot of that is energy, which they argue will see its first decline in operating net in 40 years. they take that down to 7% decline. part of the longstanding thesis of peak margins. name a few companies that might have 50 basis points on the yea year. >> i think the fed is saying that peak auto, peak housing, peak cell phone does not jive with the notion that we have to -- i'm concerned. >> you believe in all of those things. >> i do. >> rates are going up. markets not going up.
9:30 am
>> i was right. >> look at pre-market here and the s&p 500. out of balance in futures a lot of that has gone away as we get to the open. at the big board, 2016 baseball hall of fame inductees, outfielder ken griffey jr. and pitcher mike piazza. we'll speak to the two mlb stars in a few minutes. over at the nasdaq, the academy of nutrition and dietics, celebrating fit week. some interesting new standards regarding coffee and eggs this week, regarding how people think of food. >> i know. i was kind of caught up in the hall of fame thing. boy, it's hard to get in the hall of fame. you see that ballot? >> it is. >> hof is one of the great, great things that we have for football and baseball. to be in the hof -- i've always treated hall of famers with a
9:31 am
level of reference that's maybe wrong. but it's so hard to get in. >> it is hard. it was a large ballot, only two. griffey, jr., most of all time. >> wasn't that amazing? >> beat out seaver. >> now we have two mets in the hall of fame. there's the other one. mike piazza. >> let's look at the markets here. once again, list of the top s&p gain seers is time warner. >> what's going on there. >> we talked about this yesterday. i'm glad i took time out of what was a big down session to talk about it. more follow-on today about the idea of activists. ken griffey jr. waving to the crowd there. not much more to say other than keep an eye on it. nothing is -- means there's going to be activity.
9:32 am
jeff bewkes and time warner are aware that activists in the shares already may get active. it's not necessarily the names people know, icahn, dan loave, jana, barry rosenstein, it's the others who will dictate what happens here and what doesn't. if you do see an activist raise their head in a time warner, it's most likely because they got the nod from page one holders, usually five or six if not higher saying we want to see some change or we were disappointed that we didn't see the sale to fox.
9:33 am
that's the relationship that's often more important and somewhat overlooked when it comes to activism. the activist knows they got support from the big institutional shareholders. >> dodge and cox, these are considered the most fabulous investors over time who don't get the icahn -- >> they don't make themselves known publicly, but they are extremely powerful. so roger quo at dodge and caox - >> did you ever get to meet him? >> oh, yeah. >> were you not ken griffeyed when you met him? >> an incredible power. as i said yesterday, bewkes going after the golden globes, has three more years on his deal. he will be meeting with shareholders. he meets them every time he goes to the west coast, as perhaps he should. >> a lot of people blew that stock out saying i'm cutting the cord, cutting time warner.
9:34 am
that seemed like a bad call. >> when you see this move in time warner, those who perhaps were building a position thinking maybe i'll do something, maybe they think twice about it. they already have eight points in the bank. thank you. >> in a tough year, that seems like a winner. two industries written off, retail and entertainment. what does that tell you about negativity? don't get too negative. >> indeed. looking at some rebounds in names that got hammered yesterday. wynn is one of the top three gainers today. sort of shows you how far we traveled in shanghai sentiment. >> wynn, i saw somebody talk about takeover there. come on, steve wynn manages it. qorvo blows up, cirrus logic blows up and dr. avago is still rolling. up 2 bucks.
9:35 am
these will reverse at the end of the day. they could reverse. a lot of stocks people expect to be down today are going higher. i'm including 9 amazon the am e day, f.a.n.g. is expensive, facebook, amazon, netflix, google. those are stocks where everybody has been saying you buried us in f.a.n.g. i'll take credit or blame for everything other than beating my wife. >> well, you know, amazon still down almost 8%. even with the move up today. >> it was up 100% last year. can we put it in perspective? >> without a doubt. >> i'm doing a cleanse right now. that's what is making me angry. >> you don't seem angry. you seem cleansed. >> back to the jobs number. at the labor department,
9:36 am
reported 292,000 jobs added in december. unemployment holds steady at 5%. for the first reaction from the white house, let's get u.s. labor secretary tom perez. good morning. happy friday. >> happy new year to all of you. >> looking at the three-month average that ended the year. some of these revisions suggest the overall trend is strengthening. do you agree with that? >> the last quarter of 2015 was the best quarter of the year. two of the three months of 2015 were october and september. you look at the last two years, that's the strongest two-year stretch of job growth since the late '90s. auto sales last year, best ever. sales of newly constructed homes, up 15% last year. first time claims for unemployment, 43 months in a row where we've been under 300,000
9:37 am
claims. that's the best stretch we've had in over 40 years. at the depths of the recession we were looking 59 about 650,000 claims per week. moving in the right direction. 2015 is the best year for real wage growth since the recovery. we're moving again in the right direction. we have a lot more work to do. we have to continue to work to lift wages. continue to work to insure sured prosperity. it is undeniable we were in a bad ditch when the president took over. >> when the winters are bad, weather is bad, economists blame the weather. now they're saying the winter was not bad. >> i look at the trend data. we had over 200,000 jobs a month in 2015. we had even better in 2014.
9:38 am
the difference between 2014 and 2015 is probably the issues of global demand and the strong dollar. things of that nature. you look at the prognosticators, learned people like yourselves and looking back at 2014, people were saying it's probably 2020 when we get to 5% unemployment. here we are, the beginning of 2016, this is the third month now that we've been at 5% unemployment. we have been outperforming expectations, we've been ahead of schedule. we got to continue to do that. that's why with the transportation bill that was just passed by congress, i'm optimistic that we can continue the momentum there in construction. construction had a great year last year. they can do better this year. you look at the healthcare sector, you know, i thought the aca was a job killer, but certainly the numbers don't bear that out.
9:39 am
i think we have more to do. undeniable. but the progress we've made is equally undeniable. >> mr. secretary, jim cramer. both happy new year and congratulations on these fabulous numbers. >> thank you. the resilience of american people and american business. >> i like people getting hired, so do you. one amazing thing i keep hearing is that gasoline and oil going down is really going to cause a big problem. these numbers tell me that maybe that's the wrong way to look at it. people are hiring and feeling better about it because the raw costs are going down. can we say from you, do you think energy itself going down is a positive for job growth in this country? >> well, i mean, i think that's undeniable, jim. the average household has had somewhere between $500, $700 extra in their pocket.
9:40 am
70% of gdp growth is consumption. this has put money in peoples pockets. it's undeniably had adverse impacts in some tekt sectors of economy, but overall when you go to the -- every time i go to the gas station and fill up, i have a smile on my face. i'm spending a lot less money. so are the american people. that's a net plus for them. >> quickly, mr. secretary, finally, obviously a strong report. a couple things that did worry people. weekly hours of work declined slightly. and there was an uptick in part-time work for economic reasons. are those one-timers or are you worried about them. >> part-time for economic reasons in 2015 that went down by over 750,000. you look at the hour trend data. again, pretty solid.
9:41 am
even in manufacturing which had a down year in 2015, the average person working in manufacturing is working slightly over 40 hours a week. so we monitor month to month but we look at that trend data. the trend data is showing a lot of solid performance. >> mr. secretary, thank you very much. see you next month if not before. >> always a pleasure. happy new year to you and your listeners. meantime, dow is up 72. not as high as the futures indicated. bob pisani is on the floor. >> that's right. let's look the s&p futures. we had a nice rally overnight and on the jobs report. they sold into that throughout the movement this morning. the rally over in germany as well. that was nice to see. again, they sold into the futures, the business on that. in theory we should be getting a rally here. china had a nice about-face.
9:42 am
they set the circuit breaker to be removed. the yuan mid point was set higher. and insider trading ban in place. there was extreme oversold in socks, extreme bearishness, and inverted vix. that would indicate a bounce today. modest so far. in europe, oversold in daimler-chrysler, allianz, basf. daimler down 10% this week. all it can manage is a 0.7 gain. new lows in the financials, morgan stanley and goldman sachs down 9%, 10% for the week. modest moves on the upside here. what we don't have are the oil moves. modest moves considering the declining. exxonmobil here, the big flight
9:43 am
to quality for oil stocks, many down 6%, 7%. exxon down about 2%. it has the near 4% dividend yield. that's a good move for them here. holding up well here. finally, jim, i know you were talking about the apple barbers out here. here's one point for anybody. apple now has the same dividend yield as the s&p 500 who would have thought that would happen. 2.1%. the dow up 64 points. carl, back to you. >> thank you very much, bob pisani. >> let's get to the bond pits, rick santelli is there. >> labor secretary perez is right. it's undeniable, americans are pretty much better off and have a good savings on gasoline. also undeniable that savings for family of four are dwarfed by extra expenses like healthcare and the fact that wages have not
9:44 am
grown. if we look at interest rates today, we had a good jobs report. we still don't have a productive economy like we once did and we don't have the growth, but it is, at least on the job scene, a solid report for the most part. if you look at intraday ten-year note yields, they do what normally we see happen on the better labor report. not to a great extent. we're virtually unchanged with yesterday. guess what the high yield of the year was? 227. and that has remained. if you bought the market on the first trading day of this year, closing day basis, not one tick of heat. now let's go to where the action is. dollar/yen chart. this is the highest level for the yen. the lowest level for the dollar since february of 2014. dollar yuan won'ts to improve. even though markets did not reflect a lot of anxiety today. still the best levels on the dollar versus that currency
9:45 am
since february of 2011. pound versus dollar. wow. look at the pound. lowest level since june of 2010. we are handicapping central banks and trying to see if economies respond to cheaper currencies, but all in all you need to monitor the currencies to figure out the interest rates. david faber, back to you. >> thank you very much. >> all right, fresh from the opening bell, ringing that opening bell, celebrating their induction into the baseball hall of fame, ken griffey jr. and mike piazza join us on set. congratulations. >> thank you. >> mike, you and i spoke opening day. >> yeah. >> not that long ago. spoke to you twice in a year. joining as a met to join seaver. congratulations to you both. let's start not with a tough question, but i'm curious. neither one of you won a world series. would you have rather gone to a world series than the hall of fame? >> thanks for ruining our
9:46 am
morning. a lot of people who won world series and not be in the hall of fame. this is a small group. so i would probably say as much as i like to win, i think this group is a little more exciting. >> i'm glad you answered the question. i was curious. what does it mean to you. an incredible career that you had. and actually the most votes, i think, of all time to get in. >> it means a lot. any time that somebody does something for you in a positive way, celebrates your career, and puts this honor on you, it really means a lot. words can't describe how i feel. you know, the last couple days we've been over there, okay. what are we doing? where are we going? but it's been an awesome two day days. >> for me, this is very special. i grew up in the '70s, i was a
9:47 am
huge fan of ken's father, the big red machine. having to play with kenny, i remember that's how great this game is. in the sense that we had two -- probably the two most diverse paths, him being a first overall pick and me limping into the game. that's how great baseball is. you can have a superstar, first round pick and a guy who, you know, blue collar who found a way to get it done. that's what is very special about baseball. >> yeah. you grew up with the big red machine. so you join, i guess who from that team? bench and morgan who are in. >> perez. >> yeah. >> for me, growing up watching those guys, they were just dads. we would run into the clubhouse, grab our dad's gloves and run back to the tunnel and play catch. i didn't realize who my dad really was until i was in the eighth grade. and my dad was playing for the
9:48 am
yankees, and a guy goes, your dad plays baseball. yeah, okay. i kept going. no, your dad is on tv. i go, your point is? he was just dad. that's what i try to express to some of the kids. i'm just a normal dad with an abnormal job. just because i'm on tv doesn't mean i'm different than anybody else. so, i try to, you know, instill that in my kids. i'm dad. i got to have a little thick skin. my youngest tells me all the time, can you tell me how you played back in the day? you were still born. you were born when i started to play. it's quite fun being a dad. >> mike, was it a struggle emotionally to be -- to go in as a met or not? >> not especially. i -- i had such a connection here with the fans. the journey here was difficult at the time. but the fact is, you know, i went through the baptism here, coming here and fans not knowing me that well, not embracing me
9:49 am
right away. going through all the -- the eight years here. >> did you talk to lasorda. >> i did. so tommy was a little bummed out. he understood. you have to choose one. i feel like the fans here's made me a part of their family. >> do either of you take -- is the stock market something you ever look at? >> yeah, we're looking good right now i keep looking over your shoulder. >> our kids are expensive right now. let's get it going. keep it going. >> i got two in college. >> i have a football player who eats all day. >> you guys are long-term thinkers, we have become short-term thinkers. i wanted to know what your perspective is. i own stocks. their pretty good. i try to own good companies. we are a little caught up in the short-term. >> no, see, i go in there and slide that phone down and go, come on. >> when it comes to long-term,
9:50 am
you two obviously from this class, but mr. bonds, mr. clemens, they're there are any number of others who conceivably may get in. i'm curious as to your thoughts about the steroid era and the players who identified with that. do you think their time will come? >> i think so. just because, you know, the jump that they made from last year to this year. i think that continues. they'll eventually get in. >> i think the process is what really sets it apart. i had such respect for the process, the debates, all the things the voters go through. that's the one thing about this country. what you guys do, there's so much analysis, so much going back and forth. that makes it interesting, fun. sometimes it's excessive. but that's what this game is all about. numbers, statistics and debates.
9:51 am
it will be interesting. >> two of the greats. we appreciate it. backed up by what's on your new jerseys there. >> yes. those are gorgeous. >> hall of famers, mike piazza, ken griffey jr., thank you. >> the dow is up 60 points.
9:52 am
9:53 am
9:54 am
we did get a bounce on that better than expected jobs number. for the week the dow is down about 4.8%. as you probably heard. worst start for a year ever along with the s&p 500. we'll get stop trading with jim after a short break.
9:55 am
there's a lot of places you never want to see "$7.95." [ beep ] but you'll be glad to see it here. fidelity -- where smarter investors will always be. if only the signs were as obvious when you trade. fidelity's active trader pro can help you find smarter entry and exit points and can help protect your potential profits. fidelity -- where smarter investors will always be.
9:56 am
9:57 am
it's not often that cirrus logic blows up. last night pre-announcing and going higher it has to do with the apple iphone 7, they believe they could have significant content in there. people saying maybe there's home after iphone 6. apple is not done yet. get out of apple if you're just going to sit there and do nothing but complain. >> what's on "mad" tonight. >> we hav have rusty braziel. everyone says everyone got it wrong in oil, rusty got it right. one guy who got it right. i got him on tonight. one. >> we'll see you tonight. good week. >> great week.
9:58 am
>> when we come back, jan hatzius on the numbers.
9:59 am
10:00 am
10:01 am
good friday morning. welcome back to "squawk on the street," i'm carl quintanilla with sara eisen, simon hobbs and david faber at the new york stock exchange. this premarket rally on the jobs number, better than expected. trying to hold here. dow up 100 points. watching oil closely, which has gone into the red. let's get to rick santelli in chicago. some breaking news on wholesale trade. rick? >> yes. on the wholesale inventory side -- these are november -- down 0.3. this is interesting. last month revised from down 0.1 to down 0.3. down 0.3 was the low of the year from july. now we have to go back to may of 2013 to find a smaller number at minus 0.6. that number pushed us back on the comps. let's look at november wholesale trade sales, down 1%. we expected a number unchanged. last month down 0.2%. down 1%. how does that comp? you have go back to the first
10:02 am
month of the year at minus 3.6. how this figures in, you want to see how the fourth quarter trade numbers and gdp ultimately become affected. suffice to say, interest rates are highly unchanged on the day. lower on the week despite what was perceived to be a robust headline jobs number of 2092,000. back to the "squawk on the street" gang. >> thank you, rick santelli. let's get more analysis on that jobs report from our senior economics reporter, steve liesman and the latest inventory numbers on wholesale trade factor into the idea that the fourth quarter growth number won't be so hot, yet jobs are doing great. >> right. a couple things, sara. the market will look through the inventory. we had a big build in inventories. this needs to come off, it's good if it comes off in an orderly fashion. i want to talk about the one
10:03 am
number in the jobs report, which is the three-month average. we have gone from a 218,000 three-month average, now it's 284,000, the best three-month average since january. the story is the trend of job growth accelerated meaningfully into year end while growth decelerated. couple points off this. it could be the growth data understates the strength of the economy. a lot of economists like jobs better than gdp to tell you what's happening out there. if the growth numbers are real and we're doing this hiring it seems that growth and productivity or efficiency in the economy is declining for now. it's something economists puzzle over. i can tell you fed officials are worried about it. payroll numbers up 292,000. unemployment rate unchanged.
10:04 am
big story, average hourly earnings unchanged. we are not getting the wage growth that most economists think should come along with the strong job growth. bmo capital markets saying the bottom line is wall to wall strength in u.s. employment, it allays concerns about a slowing economy. and should keep the fed on track to tighten again but before the spring. maybe not january but march. jeffries remarking this should assuage some concerns about domestic growth that have emerged in the last week due to the turmoil in china. jobs were in healthcare, up 52. construction, perhaps a boost there from the better -- warmer than normal weather. temporary help, associated probably with the holiday hiring. leisure hospitality up 29, and government up 17. the market wary of overseas developments, but the strong jobs number tells us the u.s. economy may be in better shape to withstand the foreign weak
10:05 am
answer that could be washing up on american shores. >> on the wage figure, average hourly wages rupp 2.5%. we do have wage growth. >> that's correct. if you adjust for inflation, because of oil prices, one of the best years we've had for real wage growth. that's something that the real spending power that is out there in the economy. >> steve, thank you very much. >> you're welcome. >> headline figure, 292,000 jobs created last month. 50,000 revision as well to the 2 two previous months. markets only up just. up 39 points. let's get analysis from david kelly from jpmorgan morgan funds, and tom piselli. tom, i have the data here for the last ten years. on the three-month average, we only hit this sort of figure
10:06 am
seven times. seven other times during the last ten years. given that we're there now, does it change the outlook for the consumer and for top-line growth for companies operating in this economy? >> yeah, i don't think it does. it's a nice supporting sort of piece of evidence that a consumer of 2.5% is not at all a stretch. in fact, it's something we continue to believe in. simon, you nailed it when you were talking with steve. i've continued to hear people beat up on this idea that average hourly earnings were flat. a better way to look at it, year on year, you grew at a 2.5% pace. a better way of thinking is average hourly earnings are an incomplete measure of wages. you need to include hours in the dynamic. when you do, you see an aggregate economy-wide paycheck was up 0.3%. i'm dismissive of the notion that average hourly earnings was a big blemish in the report. >> david, what's your view? >> yeah. i think this was a very strong
10:07 am
report, particularly in services. of those 292,000 jobs added, 230,000 were in the private service area. things like healthcare, business services, financial services, good service jobs. not retail jobs. i think we have to be careful to look at the data. on the wholesale trade thing, there's still an inventory reduction here. we have to take down inventories. there's a problem with global manufacturing. but global services is booming here. it's booming in the united states. when you look at it from a services perspective, this is a healthy report. it should keep the fed on track to raise rates in march. >> sorry, simon. if i could amplify, i totally agree. i get it. it's not an accident that ism manufacturing is below break even now. it's also not an accident that ism services are welcome for theably north of break even. the reality in the united states
10:08 am
is we're not impervious to what's happening from a global headwinds perspective or energy perspective, but it's 10% of output in the u.s. 90% of the economy that remains, the service sector, has a huge chunk of that driven by the consumer. the reality is the consumer fundamentals remain sound. >> manufacturing employment has stalled. it has not declined, though there's some evidence of decline in manufacturing. tom, a lot of people are going to be confused. they'll look at this -- it is strong jobs data. no question about that. the strong jobs data, vis-a-vis all the data we'll get about the output of the economy, gdp, and whether or not elements are dipping into negative territory, how should people at home square the two? >> it's easy. there's a buy bifurcation takin
10:09 am
place. even though you have 292,000 jobs, you have weak growth. that's a function of inventories. once you strip the most volatile component of gdp is inventories. when you strip that out, you're left with underlined aggregate demand running at a nice clip, between 2% and 2.5%. that's the thing people should focus on. >> david, it's all well and good to talk about this great jobs report and what it means for the u.s. economy, the two drivers of the s&p 500 over the last few weeks, months and year has been the price of oil and what's happening in china. right now the price of oil, wti, dropping below $33 a barrel again. more than 1.5% declines for wti and brent. how can you be a buyer of the u.s. stock market even if fundamentals are good when crude makes new lows and the chinese market is uncertain.
10:10 am
>> i think there's a huge opportuniop o opportunity for investors. there's no problem about global demand, it's supply. in china, they introduced circuit breakers, their markets are not mature enough, deep enough to deal with moving to a fully free market, chinese stock market. that along with trying to liberalize the currency added to the volatility. again, it's not enough for the u.s. economy, global economy. when you get markets reacting emotionally to not understanding what's going on, when that deviates with what's going on in the economy which is fine, that opens up opportunity. i saw markets moving the wrong way is the way the market moved this week. >> one person we felt who wasn't confused when he spoke earlier this week, was the vice chairman
10:11 am
of the fed, stanley fischer. he was clear oil would rebound and that it could rebound quite rapidly. they are the guys that are setting monetary policy. do we get fuour rate hikes and what does that mean for the market? >> yeah. we do think you get four hikes this year. we think this number should start to get the market thinking that two hikes this year might be on the light side. here's the reality. i said this on this show multiple times over the course of the last several weeks. the reality for the fed is this. the unemployment rate is heading lower, the hurdle to get to 4% by the end of the year, one full percentage point below the measure of nehru is low. you will there in short order. inflation rate, core measures of inflation on the ride thanks to healthcare prices and shelter prices. that narrative is something that the fed will continue to push. because that is what -- that's
10:12 am
how they'll justify going four times. it's a hurdle of events for both of those things to happen. >> have a great weekend, both of you. when we come back, china stocks did rebound after that dramatic start to the year. we'll have some china data coming out over the weekend. obviously could see more volatility. we'll talk about that after the break. crude, we mentioned, has gone into the red. back below 33, 32.86. still hovering near the 12-year lows. wow, that was random. random? no. it's all about understanding patterns. like the mail guy at 3:12pm every day or jerry getting dumped every third tuesday. jerry: every third tuesday. we have pattern recognition technology on any chart plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. td amerie.
10:13 am
10:14 am
life... is unpredictable. life is deaths. and births. sickness and health. love and heartbreak. and covered california is there for it all. not just to help keep you well. but to make sure the cost of being unwell doesn't ruin this whole life thing. because it's more than just health care. it's life care.
10:15 am
there's the dow. cramer's advice this morning was if you don't like the volatility, sell at the open. some people did. we're now only up 6 points. china breathing a sigh of relief after a tough week. we have inflation data coming out over the weekend. eunice yoon joins us again from hong kong. >> thank you very much. it appears that relief over the suspension of the circuit breaker system and suspected buying of state-backed funds to prop up shares result in the rally today in the stock markets here. the shanghai and the shenzhen markets ended the day higher. investor mood is still jittery with investors questioning and saying they are far from convinced that the government has the ability to manage the problems in the stock market. the big focus today was still the weak currency. there's pressure for the yuan to deprecate, some of that is
10:16 am
economic factors, capital outflows. the central bank confounded and confused after guiding the yuan higher. the government tried to boost sentiment later in the day. they said they would continue with their plans to approve ipos but do so at what it called a rational place. what happens in the market on monday could be affected by the data that we'll get out over the weekend. the cpi and the ppi for december, both expected to reflect weakness in the economy yet again. sara? >> thank you very much. have a good weekend. we'll see you next week. as we continue to look at china and what it means for u.s. markets, with us now from irvine, california, peter navarro, author of "crouching
10:17 am
tiger." thanks for joining us. >> hi, sara. >> it does feel to eunice's point that the chinese authorities are postponing a shakeout in the markets. do you expect a day of reckoning, and what does that look like? >> i do the chinese government has a trillion dollars in reserve and have been pumping a lot of that into the stock market to prop it up. the trend is down. last april i indicated that you should go short the chi naez markma chinese market. what i'm seeing on the chess board is a structural disequilibrium affecting the entire globe. you have the manufacturing floor in china seeing two biggest customers, europe and the united states, performing well below historic norms creating
10:18 am
basically a strong downward trend. the chinese growth rate which was 10% a year, is down closer to 5%, 6% now. for the u.s., the biggest problem, it's a huge problem now, is the strong dollar relative to the yuan. strong dollar because of flight to quality. you'll see in three or four or five months basically a downturn because we'll lose about a point off the gdp growth because of that strong dollar and falling exports. >> it's a good explanation as to why we saw such a market reaction. i'm curious about the political implications. clearly this week had to be a black eye for the chinese security regulator, putting on the circuit breaker, going back on that. what about the central bank? the market meltdown is exposing vulnerabilities in chinese leadership. >> it is command and control means capitalism, capitalism is kicking china's butt.
10:19 am
you can't manipulate exchange rates. i don't care how big your foreign reserve rates are. you can't manipulate market. think if tomorrow we put massive restrictions on money coming out of the dow. what would that do? it would create a panic. it's analogous to a bank run. the problem now politically is that sjinping has just about alienated everybody. entrepreneurs and the wealthy are unhappy because of corruption crackdowns. just yesterday another millionaire disappeared. even the largest army of the world is going on the unemployment line. yeah, we're having a quiet day today, this is probably more the eye of the storm. >> peter, "washington post" today tries to argue that the reversal on circuit breakers was
10:20 am
somehow encouraging because -- acknowledging error in that government is so unusual. do you agree? >> sure. yeah. that's a great sign. but that doesn't mean, carl, that people will not try to get their money out of that market. look at this. i'm in irvine, california, we see chinese money flood into this state, in california. why? because the wealthy in china are afraid of a political crackdown. and jinping when he came into office immediately began his construction campaign. putting entrepreneurs and politicians in jail. people are frightened. this will go on for a year or more. i see jinping -- by the time we have a new president in the u.s., we may have a new president in china. that would be destabilizing. >> what if the peoples bank of china has been quite clever this week? what if they said we will
10:21 am
de-value eight times and then stop. the reason we're doing that is we'll signal around the world that we won't accept their devaluations anymore that means europe and japan and that the qe will be less effective moving forward because the main focus of that has been the exchange rate. what if the chinese got it right on that front? >> simon, there's two things moving the yuan. one is massive speculation now betting the thing will go down, which you just outlined is a scenario that would affect that. the bigger problem with the yuan is the fundamental structural problem of wealthy chinese wanting to get their money out of china. and there's nothing the central bank can do about that. that's a political problem. the problem, simon, is that jinping and the communist party have been cracking down, they o
10:22 am
there lately. >> we'll see what happens sunday night at the open. thank you for joining us. >> my pleasure. still to come, within the next ten minutes, jan hatzius will join us, the chief economist of goldman sachs after, of course, we got a very strong jobs figure today. when a moment turns romantic why pause to take a pill? or stop to find a bathroom? cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess.
10:23 am
side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. ask your doctor about cialis and a $200 savings card
10:24 am
10:25 am
a reversal in the price of oil. crude falling back below $33 a barrel. let's send it over to jackie deangelis at the name mes >> was the buy on the dip mentality, but the reversal coming after that figure came out. if you think it was a solid report, we have to be concerned about the pace of rate hikes and
10:26 am
what will happen to the dollar. others saying they don't think it was such a solid jobs number and are worried about the hourly earnings. crude seeing pressure, now under $33 a barrel. 10% in losses for crude this week. this is not as volatile as we've seen it as over the past few days, but showing where the sentiment now is in the pit. back to you. >> jackie, thank you very much. goldman sachs jan hatzius coming up after the break. we'll talk about the jobs number. the dow did go negative, being led by apple, still up by 1.5%.
10:27 am
10:28 am
10:29 am
good morning, i'm sue herera. here is your cnbc news update. north korea staging a huge rally bringing out thousands of people to demonstrate support for the country's nuclear test earlier this week. organizers estimated 100,000 people took part. the islamic state says its members carried out an armed attack on israeli tourists in cairo yesterday. it's in response to a call by the group's leader to target jews everywhere. there were no casualties. campaigning in vermont last night, donald trump called for the elimination of gun-free zones in schools and u.s. military bases. he said if law-abiding citizens were allowed to carry guns, the
10:30 am
san bernardino shootings could have been prevented. a plane heading to chicago from new york made an emergency landing it detroit last night, after a female passenger became abusive and unruly. cell phone video shows the moment the woman was escorted off the plane. some passengers applauded as she was taken off the plane. that's the cnbc news update. carl, back to you. >> let that be a lesson. back to the jobs number, 292 was the number for december. the unemployment rate held at 5. joining us at cnbc is jan hatzius, who is here at post nine. you saw the hotter number coming in yesterday. you took your numbers up a bit. why the reaction? >> it is surprising. it was a good report. if you wanted to pick holes in t you'd say there's a big weather effect in it. hard to get nervous when it's
10:31 am
292. still a good number. the other hole you can pick is the weaker wage number, and that was clearly weaker, though we do think that calendar effects probably distorted that. overall, a good report. >> should we expect the wage component to repeat itself? it was the best month of '15, yes? year on year? >> year on year it was good. we threw out a low number. >> do we give some of that back in january? >> well, i think the trend is higher, but we -- you know, month to month it can be noisy. we should get a payback from that at some point. >> it's interesting to see the last three months of the year, a steady pick up in hiring, at the same time weak growth. 2.4 gdp. will we hit 1%? >> 1, yes. 2, i think no. >> which is the accurate picture of the economy?
10:32 am
growth or jobs? >> some of what we're seeing is more of the same. potential growth rate that -- the break-even rate of gdp growth that you need to keep the unemployment rate stable has come down a lot. for a variety of reasons. clearly fundamental, the demographics have changed a lot. some of which are open to questions, namely the weakness in the productivity numbers probably has a measurement issue in it. the facts are that we need less measured gdp growth than we used to in order to see improvement in the labor market. that's part of the story. i agree with you the gap at the moment is quite wide. the question of how that ultimately resolves itself is bigger than it has been in a while. >> jan, there are many people in the market who believe glibly that they can prevent the fed from raising rates if they're
10:33 am
not happy. you had a piece which stood out this week. you had a great record on rate moves from the fed. you ran the numbers under different scenarios, you ran the models from fed, and even if there was a 25% decline in oil and a 10% rally in the dollar, it would only mean the fed would delay by one or two rate hikes next year of the four that seems to be a deep line of reasoning that people may not appreciate. >> i would agree with you it doesn't seem like such a large impact. we made some assumptions in this analysis. one of which is the economy, the growth side of the economy, continues to perform well. even with lower inflation numbers implied by a stronger
10:34 am
dollar if th dollar. >> that's a real extreme example. 25% decline in oil, 10% gain in the dollar, and still two, three hikes. that would surprise many people. >> that probably would surprise people. from the ye there are lots of influences on fed policy. as a ballpark estimate seems sensible to me. >> when is the next hike, march? >> we have it in march. >> how many do you have next year. >> four for calendar 2016. basically every three months. >> atlanta fed, everybody talks about atlanta. profits recession, chicago pmi '09 lows what is stopping you from calling a recession? >> in the industrial sector we have a lot of weakness. i don't think it's a recession in the industrial sector but definitely stagnation.
10:35 am
the rest of the economy is doing well. the domestic sectors seem to be doing well. take nonmanufacturing ism, which covers a larger part of the economy than chicago pmi, that's in the mid 50s. consistent with solid growth in that sector. and the employment number, while they may lag behind a bit, that's something to be aware of, they are also telling you that the underlying momentum is strong, at least as of the last one. >> what do you need to see, a decline in services? anything else? >> decline in services. bigger tightening in financial conditions. clearly financial conditions have tightened. that's something to be focused on. we are. but i think you need a bigger tightening in financial conditions. i don't think a recession is likely. >> jan, you travel the world. a lot of people want to sit across the table from you and get the goldman view, that includes asia and china. you know the guys behind what's going on there. you've met them, i'm sure.
10:36 am
i'm sure you met them and know them by name. what do you think of what's going on at the moment? what is the message to the clients? what's the received wisdom? >> i think clearly we are seeing a slowdown in china that probably still has a ways further to run. one, we've seen a large trade ways, cmi appreciation. that's weighing on the external side. on the internal side, credit is growing faster than normal nall gdp. there's a need to adjust that lower. i think the chinese policymakers are aware of that. they're aware the growth rates have not been sustainable. you need an adjustment. >> will they stimulate? >> they will want to keep that gradual. >> with reon the verge of a major stimulation? >> i think they do want to stimulate. they have started to stimulate or lean against the forces of slowdown on the fiscal side. now on the monetary and currency
10:37 am
side. the forces of slowdown are also strong, so they need do a lot to keep it a gradual slowdown. i think that would be our baseline expectation, that they will succeed in keeping the economy growing, clearly at a sloer pace, but when you have this amount of volatility, it looks a lot larger than a few weeks ago. >> you have your work cut out for you this year, jan. >> it will be interesting. >> jan hatzius of goldman. gap shares lost more than 40% last year. once a bright star, old navy, sales declining there in december. we'll talk about that retailer coming up. and twitter with a one-handle for the first time ever at 1971.
10:38 am
10:39 am
10:40 am
10:41 am
gap is having a bumpy start to the year after a rough 2015. courtney reagan has that story. >> it's been a tough transformation for ceo art peck so far, and the holiday season did not happen. gap's overall sales comps were down 5%. weakness was across brands. gap slightly improved, banana republic continuing to bleed. even old navy couldn't best last year's comps. even stripping out currency, overall sales down 3%. the company continues to hope its spring collection, the first conceived under art peck's leadership will turn the tide. american eagle reiterated guidance for its first quarter. the ceo calls the holiday quarter solid despite a
10:42 am
challenging macro environment. analysts are disappointed. shares down almost 16%. after the bell, urban outfitters released its holiday sales. comps decreased 2% overall. the retailer points to declining store traffic. the container store continues to disappoint. shares hit a new record low in late training after the company posted a loss. wall street had been looking for a gain. higher than expected healthcare, payroll expenses are partially to blame. the company slashing its full year guidance. shares of bed bath & beyond took a hit after hours. company met revenue expectations for the third quarter but missed on earnings. brick-and-mortar stores suffering there. heavy promotions squeezing the retailers margins and comp sale guidance for the quarter there. an increase of 2%. bed bath & beyond did give us a bit of a warning in december. we knew at least some of those
10:43 am
results earlier on. simon, back to you. >> that's a brutal move on the container store. not long ago they had the ipo. >> and they've struggled since the ipo. the company is finding it hard to get investors to believe in the story. with the dow now up 23 on a great day for employment figures. here's rick santelli. >> thanks, simon. i will run with your exact line, simon said a great day for employment figures. dow up 23. >> it's a bit of a disappointment you would have thought we would have been up more. futures up 200, but i think the bigger issue is what's happening with some of the other numbers. you're getting huge employment growth. but you are not getting wage growth. >> and you're not getting gdp growth and productivity. >> it sounds like it will squeeze margins. we will hire more people and just spend more, but we're not getting more gdp or
10:44 am
productivity. >> i got in on a discussion with the group this morning. i've been down here since '79, the reason i paid attention to jobs as the most important number, it says growth and productivity and gdp are highly correlated with the jobs market. should we pay that much attention now? is it the quality of the jobs or the infrastructure of our economy that's less productive? how important is it now to concentrate on growth and productivity versus the raw numbers of jobs? >> you have to separate it into two things. if you're talking about how the economy is doing, you're right. growth productivity, jobs matters. in the reality of 2016, and in 2015, we cared about one thing, when was the fed going to raise rates. >> now they answered the question. >> that was the metric we wanted. >> the fed raised the level up because it's fundamental to strategy. hence the importance. which brings me to another point. what was the unemployment rate
10:45 am
today? >> 5%. >> about a month ago i was on the air saying i wish somebody would hold the labor force participation rate constant so we could see what's going on. an hour later you e-mailed me and said done. tell viewers and listeners what it means. >> october of 2009, unemployment rate is 10%. today 5%. down 5%. 2.6% of that drop is because people left the work force. 2.4% of that growth is because of economic growth. if the participation rate helped steady, we would be at 7.6% unemployment rate now. >> if i promoted you to head of the fed, would you look at your chart to gauge policy or the advertised 5%? >> i think you would probably want to look at that chart. i think the fed has. that's why they created the labor market's conditions index. they recognize the fundamental flaw with the unemployment rate and they tried to invent a new
10:46 am
statistic to try to compensate for it. >> do you think policy would have ended up different if 7.9% was viewed as the real rate? >> yes, but i never thought the reason they were raising rates is because the economy was better. the fed does not like being in the market manipulation basis. they were getting out of that. >> i arrived at that conclusion a long time ago. many people on this floor did. as we continue to look up at fed funds and what is built into the market, the market is not believing that. you're a firm advocate if the market doesn't believe it, you don't get it. in the final few seconds, square that. >> that's right. the market needs to believe what the fed is doing, they don't. that's why we had confusion along the way. we'll continue trying to figure out what not investigates them to do what they're going to do. quick word for you, 2012, the fed said the economy was unacceptably bad. they gave us qe.
10:47 am
2.4% gdp. today 2% gdp, worse, they're raising rates. i can't skate that one. >> jim, always a pleasure. sara and the gang, back to you. >> good conversation, rick santelli with the dow now up 57 points. it has been a bumpy start, the worst ever start to the year for the dow and s&p. as goes january, so goes the year? that's the topic of jim stewart's latest column.
10:48 am
10:49 am
10:50 am
you know the saying, as january goes, so goes the entire year. if the start of 2016 is any indication, it could be a rough year. stock trying to mini rally here. our next guest writes that january market's crystal ball is not quite clear. joining us here is "new york times" columnist jim stewart. this is the kind of wisdom investors need after the week they had. >> everybody loves these simple rules, especially when the real world seems so complicated. so they grab on to these things to make sense out of complicated
10:51 am
subjects. the record on the january thing is impressive. the correlation is quite high. over 87% if you exclude five years, 70% including all years. the problem is it could be a purely random correlation. if you have 60 million possible correlations of the stock market, you will find some with perfect accuracy. if you flip 1,000 coins every year and keep coins that are accurate about it over ten years, will you have coins that are 100% accurate. you can call them magic coins. >> what's interesting is we don't know what january will do. the rest of january. >> right. >> there is a five-day indicator for stocks? >> yeah. the five-day indicator applies
10:52 am
in presidential election years. this is one. it says the first five days will indicate the whole year in those years. and that one has an even better track record, accurate 14 out of the last 16 presidential election years. this has been a resoundingly down first five days which does not look good. you know, i still think, even the author of this tells me he does not completely rely on this it's an indicator but one of many. >> this is a big week for us. we had richard fischer on, former member of the fed who said, you know, we advanced the market rally, caused the market to rally. can we show a 20-year chart here of the s&p 500? when you look at the shape of the charts, and you look at the enormity of the five years, this type of indicator and calendar stuff seems almost churlish,
10:53 am
like an old wives tale given what you had in that market and that huge rally. that doesn't seem to be predicated on almanac stuff. do you know what i mean? >> absolutely not. at first glance i would dismiss this out of hand, but this is not quite like the hud lines or the super bowl. there may be -- even professor caleb said he wouldn't bet against this. it's like there may be a mirn cause and effect here, but there might be some psychologically. >> the point i'm making, the data that you're referencing goes back 65 years. for maybe, i don't know, maybe 45, 50 years of that, life was normal. it was insular, it was a different economy. wall street could do what you wanted it to do. now these tectonic plates, china. fed doing what it never had done before, that might distort that data to the fact that it's not relevant anymore. >> that goes to my initial point, this is very complex
10:54 am
material, and my rule is don't try to time markets if you're an average investor. buy when stocks are down, sell when they're high. don't sell in down markets. ie don't sell low. he said that does seem to work. my feeling is buy when markets are low, sell high, ignore this static factors. i wonder if there is a notion in 2016 that without the fed they're easing the pain. things like a china meltdown in the stock market or a currency devaluation don't seem as comfortable for global investors. over the last six years they had the fed in there. >> that's a big concern for the year ahead, the fed, the uncertainunser uncertainty about the fed, but
10:55 am
maybe the fed won't do that much, they won't raise it three, four times, maybe only two or one. it's not like the fed wants to see the wealth effect simply evaporate. >> you were watching. i knew you would be. >> are you going to tell us the hemline indicator? they're getting longer, i have to say. >> really? i think that has been abandoned. except every now and then. >> that's next week's column. >> i think that one has been discredited. >> i think you should investigate it. >> nice to have you back after the holidays. we missed you for two weeks. jim stewart of the "new york times," thank you. >> let's send it over to kayla tausche and see what's coming up on squawk alley. >> we'll take you inside what's moving and driving today's action. and a noted apple analyst who has recently turned bearish,
10:56 am
believing that apple has been overstating the underlying trends. we will have that analyst live. we're also watching twitter going below $20 a share for the first time. all of that and more up next on "squawk alley." man, i'm glad aflac pays cash. aflac! isn't major medical enough? no! who's gonna' help cover the holes in their plans? aflac! like rising co-pays and deductibles... aflac! or help pay the mortgage? or child care? aflaaac! and everyday expenses? aflac! learn about one day pay at blurlbrlblrlbr!!!
10:57 am
do something! get on the floor! oh i'm not a security guard, i'm a security monitor. i only notify people if there is a robbery. there's a robbery. why monitor a problem if you don't fix it? that's why lifelock does more than free credit monitoring to protect you from identity theft. we not only alert you to identity threats, if you have a problem, we'll spend up to a million dollars on lawyers and experts to fix it. lifelock. join starting at $9.99 a month.
10:58 am
10:59 am
. we had a great jobs report today, 292 jobs created in december. and a 50,000 addition to the previous two months. solid, solid gains, but still the markets are not performing well. >> let's show you where we are. you need to be looking at a five-day chart. what an historic week it has been for the stock market. bouncing back a tiny bit today. with the dow jones up about 30 points. s&p 500 down 0.2% -- up 0.2% after what was one of the worst starts of the year. the worst start for the year for the s&p 500 and the dow in history. concerns about -- >> since 1923. >> a 2% move higher in the chinese stock market overnight with some state buying. we'll be watching the open on sunday night. watching the inflation numbers, and of course oil. moving to the down side again. flirting with 12-year lows. wti under $33 a barrel.
11:00 am
>> it's the weekend. one more alley to go. >> it may be the weekend for you, we still have some more to go. good morning, it's 8:00 app at apple headquarters, 11:00 on wall street. "squawk alley" is live. ♪ good friday morning, jon fortt on his way back after a week at ces. stocks did start with a nice gain after that jobs number of 292,000 for december. but it has been whittled away. now the dow hanging on to 36 points. bob pisani is on the floor watching what's moving. >> the important thing is we


info Stream Only

Uploaded by TV Archive on